Development Research and Policy Making in Africa: some reflections

1. Development Research and Policy Making in Africa: some reflections Abebe Shimeles Development Research Department African Development Bank EADI Conference NORDIC Conference Bergen, Norway August 2017

2. Key issues to be addressed • What has been the role of development research in shaping policy making in Africa? • Does good policy promote growth and development? • Should it change? If so how?

3. Key messages • Africa is at the cross-roads at this moment in history: leapfrog or be overwhelmed. • In most African countries the agenda of development policy has been set or heavily influenced by “the development community” excepting the first decade and half following independence. • This has had some successes but also clear failures. • To leap frog, policy making cannot be outsourced. Homegrown expertise and strong research capacity are necessary for rapid and sustained development.

4. Africa it at a cross-road at this moment in history • Last two decades have shown strong recovery in Africa: per capita GDP has increased by 25%; in 18 countries it has increased by 50%, in about ten countries it has doubled. • Yet poverty is still widespread and is declining slowly (Figure 1) • Growth has also been more episodic than sustained (Figure 2)

5. Figure 1: Despite good growth during 1995-2010, poverty reduction has been slow in Africa

6. Figure 2: growth sustainability have improved but a lot is needed

7. Rapid, sustained and inclusive growth is needed in Africa • Africa has the potential to grow at 10+ a year. And that is also a growth rate it needs to turn the tide of rising population, youth unemployment and inequality. • But it needs to put its acts together in designing and implementing bold and visionary development policies. • This can be assisted by localized, well coordinated and implemented development research: examples include that of China, India, South Korea, Chile, Brazil, etc as each country self-discovers the shining path to prosperity.

8. The current practice of outsourcing development policy should and must change • The wholesale applications of one-size fits all development policy should be revisited: import-substitution strategies, structural adjustment programs, poverty reduction strategy papers, etc all have short-changed policy making in Africa. • MDGs, SDGs are excellent ideas. But they need not replace local development priorities.

9. Is good research good for policy? • We can give several examples of bad research influencing policy • Education policy in Africa has for along time been formulated on faulty research about the role of primary education as instrument to reduce poverty and inequality • So much of agricultural policy relied on faulty research, • Labour is much less productive in agriculture; • Women provide the bulk of labour in agriculture; • African farmers use less modern inputs; • Commercialization of agriculture enhances nutrition; • Non-farm income exists for survival; • Land markets play a minor role in the development of agriculture

10. Policy Reforms in critical areas could be helpful for development • Empirical evidence is lacking on how policy reforms could impact growth or development. There are however now emerging localized research based on field experiment data or quasi-experimental research • However, there are strong correlations between improved business environment and corruption (Figures 3a, 3b and c3). • Reform could also be growth enhancing (Figure

11. Figure 3a: strong correlation between ‘competitiveness” and governance

12. Figure 3b: the same as Figure 3a but with per capita GDP accounted for

13. Figure 4: Reform could enhance growth

14. Conclusions (what is to be done?) • A chat with Professor Vittorio Corbo, architect of Chilean economic policy: anecdotal evidence from 1996, “Africa need to train first class economists”. Echoes Milton Friedman’s lament “often bad policy is a result of poor understanding of economics”. • Africa should stop outsourcing development research and policy making. • Universities, independent think tanks need to take the wheel of policy making in Africa; • The development community can also help change perceptions, aspirations for Africa through rigorous research.